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How to Qualify for Chapter 7 Bankruptcy in Redwood Falls, MN, With a High Disposable Income

Whether you’ve become overwhelmed with credit card debt, accumulated debts over the years that outweigh your income, or struggled financially for any other reason, filing for bankruptcy might be your best course of action. For most individuals, Chapter 7 bankruptcy is a popular option because it alleviates a large amount of debt and makes rebuilding credit possible for even the poorest scores. However, qualifying for Chapter 7 requires passing the Means Test, and if you have an income higher than the median Minnesota income for a household similar to yours, you may not qualify. Behm Law Group, Ltd. attorneys can help you determine if it’s possible to qualify for Chapter 7 bankruptcy in Redwood Falls, MN, even with your high income.

Despite how black and white the pass/fail system of the Means Test may seem, it is possible to find gray area when it comes to qualifying for Chapter 7 bankruptcy with a high disposable income. The Means Test is designed to weigh all the aspects of your financial situation, and as long as everything is documented correctly, it’s possible to qualify for Chapter 7 with a high income if your situation meets one or more of the following standards:

  • Your number of financial dependents is high enough to overbalance your income. More dependents to support means more money spent out of your income.
  • You owe child support, back taxes, overdue payments on car loans, attorney fees, mortgage, or other property.
  • Your car or mortgage payments are high and prevent your income from being high enough to work with a debt repayment plan through Chapter 13.
  • The majority of your debts are business related, not consumer related. This can include business and personal income tax debts, personal loans for business, and credit card debts accumulated from purchasing for your business.
  • You are currently on active duty or have been active within the previous 540 days for the National Guard or other military reserve.

These standards act to balance out your income with your financial obligations and debts. Even with a high income, aspects of your financial situation may mean that the money you earn is outweighed by the money you spend.

For more information about the Means Test and filing for bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.

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How to Know if You Quality for Chapter 7 Bankruptcy in New Ulm, MN

If you’re struggling with debt, filing for bankruptcy might be a great option to help you get back on your feet and recover financially. For most individuals—and even for some small businesses—filing for Chapter 7 bankruptcy is the most attractive option for alleviating debt and rebuilding credit. Not everyone, however, will qualify for Chapter 7, irrespective of how overwhelming the debts may be. Behm Law Group, Ltd’s bankruptcy attorneys can help you throughout the bankruptcy process and determine whether you qualify for Chapter 7 bankruptcy in New Ulm, MN.

Chapter 7, or liquidation bankruptcy, is a type of bankruptcy that is designed to discharge all your qualifying debts and liquidate your non-exempt assets to pay some dividend your creditors.  The bankruptcy code provides very generous bankruptcy exemptions which allow you to retain your property.  In most cases, the bankruptcy exemptions will be sufficient to allow you to retain all of your property.  Sometimes, the value of the property you own may exceed your allowable bankruptcy exemptions in which case the bankruptcy trustee administering your case would be required to liquidate or sell the non-exempt assets and divide the proceeds among your creditors.  In order to file for chapter 7 bankruptcy relief, you must first qualify by passing the Minnesota Means Test.

Means Test

The Means Test is an evaluation of your disposable income. By comparing your average monthly income during the six-months prior to the month in which you file for bankruptcy with the median income or state average income for a household of your size, the courts will decide whether your income is low enough for you to qualify for Chapter 7. To put it simply, if your income is lower than the state median or state average income for a household of your size, you qualify for Chapter 7. If your income is equal to or higher than the state median or state average income for a household of your size, you still must complete the Means Test in full, and the courts will decide if you qualify based on the balancing of your expenses and income.

Even if you qualify for Chapter 7 bankruptcy after taking the Means Test, there are some other aspects of liquidation bankruptcy to consider:

  • Only certain debts are discharged during the Chapter 7 process, while other debts, such as some tax debts, child support debts and criminal fines, are not subject to discharge and you must continue paying them after your case is concluded. If you have more debts that are non-dischargeable than those that are discharged, Chapter 7 may not be the best type of bankruptcy for your financial situation.
  • When you enter the process of Chapter 7 bankruptcy, your non-exempt assets will be liquidated by the bankruptcy trustee to pay a dividend your creditors, just as your debts are discharged to alleviate your financial burdens.

Chapter 7 may be the perfect choice to get you back on your feet. On the other hand, Chapter 13 or other financial actions might be a better option for your situation. Find out more about the paths that lie ahead of you, and contact Behm Law Group, Ltd. at (507) 387-7200 for more information about bankruptcy in New Ulm, MN.

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Priority, Secured, and Unsecured Claims and How These Types of Debts are Treated With Bankruptcy in Mankato, MN

If you find yourself in a position where filing for bankruptcy is the most logical course of action for you and your family or for your business, you will also find that you have creditors to who will fall into different categories and that creditors in the different categories have different rights.  When you think of creditors in bankruptcy, you should think of them being listed in their different categories as on a totem pole.  Behm Law Group, Ltd. provides legal assistance to help you throughout the process of filing for bankruptcy in Mankato, MN, and to protect and direct you in the face of your creditors.

When you file for bankruptcy, your creditors must file proofs of claim with the bankruptcy court to show, as a matter of public record, the type or category of debt that you have with each of them and how much you owe to each of them. These claims can fall into the following three categories.

Secured Claims: These claims should be viewed at the top of the totem pole.  When your creditor has a lien on your property (or a security interest), they can file a secured claim. Mortgages and car loans are common examples of debts with security interests attached. If you default on these types of debts, your creditors can enforce their liens and reclaim the property (i.e. house, vehicle, washer/dryer) securing their liens. Chapter 7 filers must specify in a bankruptcy form called the “Statement of Intention” whether they want to surrender property/collateral to a creditor or continue making debt payments and retain the property/collateral. Chapter 13 filers can continue paying off the debt secured by the property/collateral with their established repayment plan and in some cases even eliminate the lien their creditors have on that property/collateral.

Priority Claims: These claims should be viewed in the middle of the totem pole.  Where unsecured claims are on dischargeable debts with no secured collateral, priority claims are non-dischargeable debts with no secured collateral. “Non-dischargeble” means that they are not subject to being wiped away or discharged.  These debts are unsecured debts but they are debts that Congress, for certain public policy reasons, determined should not be subject to discharge.  For example, child support debts, some tax debts, and criminal fines are generally not subject to discharge in a Chapter 7 case. Creditors to whom you owe these types of debts file priority claims when you file for bankruptcy relief. Because these debts are not discharged, you must keep paying them even if you file for Chapter 7, and they must be completely repaid with your chapter 13 repayment plan if you file for Chapter 13. Creditors with priority claims will be repaid before those holding unsecured claims, but after those with secured claims.

Unsecured Claims: These claims should be viewed at the bottom of the totem pole as they have a lower priority than secured claims and priority claims.  These claims are only applicable to debts with no secured collateral. Most frequently, these debts include medical bills, personal loans, and credit card debt and are almost always discharged with a Chapter 7 case. With Chapter 13 cases, your non-exempt assets and your disposable income determine the repayment plans for these debts. Creditors with unsecured claims are often paid last and paid least.

If you are considering filing for bankruptcy in Mankato, MN, and you would like to learn more about how Behm Law Group, Ltd. can help you throughout the process, contact us today at (507) 387-7200.

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Scams, Frauds, and Traps in the Path of Those Searching for Debt Relief in Worthington, MN

Credit repair, debt relief, debt consolidation, and debt erasure are all tempting ideas to those seeking reprise from their financial struggles. Unfortunately, most of the offers that you see advertisements for or receive by phone, email, and mail are fraudulent. The rise in credit card debt over the last 20 years in combination with several dips in the economy from 2001 onward has significantly increased scammers’ prospects of taking advantage of those in debt. If you are struggling financially, Behm Law Group Ltd. provides legal support for bankruptcy proceedings and information about debt relief in Worthington, MN.

Promises to repair credit debt or erase bad credit are frequent claims of scammers in the world of debt and bankruptcy. While these scams and frauds are dangerous situations to fall into, there are some situations where legal and legitimate debt relief is possible.

Recognizing Fraud 

Because the majority of companies or organizations promising credit repair and debt erasure are fraudulent, there are often clear signs of the traps these scammers want you to fall into. The most obvious signs of fraud include:

  1. Withholding information about your legal rights or failing to provide legalized, clear-cut terms
  2. Requiring an upfront fee or an initial payment before services are provided
  3. Pushing you to dispute your credit report in entirety
  4. Encouraging you to take on a new credit identity

What these scammers do is illegal, and taking part in any of their proceedings may leave you subject to indictment and force you into legal proceedings for debt fraud. Find out more details about credit repair fraud and companies offering illegal services here.

 Legal Debt Relief

Bankruptcy is almost always an option for those struggling with unmanageable credit card debt or debts accumulated from a variety of sources. Behm Law Group Ltd. can help you throughout the process of filing for bankruptcy, but even throughout bankruptcy proceedings, there are ways to begin improving your credit slowly but surely. Approved credit counselors can help you understand how your debt was accumulated and how to avoid such situations in the future.

If you’re worried about your financial situation and have been tempted by the calls about credit repair and debt erasure, contact Behm Law Group Ltd. today at (507) 387-7200 for information about bankruptcy and debt relief in Worthington, MN.